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Electric reams

In a speech last month, Lord Justice Jackson revealed one of his biggest regrets in relation to his 2013 reforms: that so little use has been made of his disclosure rule. Recognising that disclosure is a huge cause of ‘excessive costs’, the judge is clearly disappointed that the legal profession – and indeed the judiciary – have not been more imaginative in the way they approach the issue.

As part of his civil justice reform package, he set out a broad ‘menu’ of disclosure options that parties and the court should consider, ranging from no disclosure at all, to disclosure by issue, through to very wide disclosure. The idea was that parties would consider the issue at an early stage, with the most appropriate and cost-effective option selected at the first case management hearing. But like stubborn restaurant diners who refuse to order anything but the steak ‘n’ chips, litigators have snubbed the Jackson specials menu and repeatedly opt for wide-ranging ‘standard disclosure’, just as they always have.

‘The Jackson report has not made any difference at all,’ Moya Clifford, solicitor at Hill Dickinson, pointedly states. ‘We are four and a half years on from the report, and the number of times that these options are being used is extremely limited. We’re still no further forward.’

What lies behind this deep reluctance to move away from standard disclosure? There are many factors at play; some very straightforward and others more complex.

Clifford asserts: ‘It is partly down to laziness on the part of the profession. They simply won’t engage with anything that’s new.’ She would like to see more use of ‘reliance-based disclosure’, which is commonly used in international arbitration. Parties initially submit only the documents that evidence their arguments, but further disclosure of other documents can be ordered later.

‘Reliance-based disclosure is quite typical in international arbitration, and nobody dies – you still get justice,’ Clifford remarks. ‘In fact, we have used the reliance-based option recently in litigation. The other side agreed because they had no interest in a large disclosure exercise, so it suited them, and we got it through.

‘Just because you have reliance-based disclosure, this does not mean that you can’t go back to the court for other specific documents. But it does involve looking at the disclosure issue early on.’

Gareth Tilley, a barrister at Serle Court, London, agrees there is a ‘general inertia’ about disclosure in the profession, born of ‘the familiarity that everyone has with the status quo’.

But he adds: ‘It’s also about a scepticism or mistrust of the other side, and whether you would actually get all the relevant information if you went for a lesser disclosure option.’

Another more subtle factor is a concern over how the client may perceive a litigator who does not opt for the usual disclosure demands. Tilley explains: ‘Lawyers worry that they might be accused by their own client of not going for the jugular – the client might think it is a half-hearted measure.’

He adds: ‘Lord Justice Jackson is looking at things from a bird’s-eye perspective, in terms of what would be best for everyone overall. But lawyers are looking at what is best for their own client.’

Often, of course, a more narrow disclosure request would in fact be in the client’s interests. ‘Disclosure is super-expensive, and in many cases it is super-useless,’ Tilley observes. ‘You so often get repeated, irrelevant documents. So you would think it would be easy to sell [a narrower disclosure option] to clients.’ But that does not necessarily fit with the mentality of litigation. ‘They are down in the trenches ready for a war,’ he explains.

That said, many clients are very agitated about the costs of disclosure. In particular, the GC100 group of FTSE general counsel have expressed concerns that the Jackson changes have not done enough to reduce the huge disclosure burden with which they find themselves saddled.

Moya Clifford

But sometimes standard disclosure is a weapon of war in itself, intended to grind down the opponent with the size of the task. ‘If a party has large pockets they will want to run the other side into the ground by forcing them to disclose as much as possible. That also creates the fear of a large costs order down the line,’ Clifford says.

Lawyers also worry that if they do opt for a more narrow disclosure option, the client may later turn around and accuse them of failing to do all they should have done to uncover crucial evidence. ‘There is a lot of fear around,’ Clifford says.

Another big problem is ‘document dumping’, whereby an excessive amount of data is disclosed that will then take the other side months to review. Ed Crosse, a partner at international firm Simmons & Simmons and president of the London Solicitors Litigation Association, explains: ‘Sometimes this is deliberate, but more often it is because lawyers have taken an overly inclusive and cautious approach when reviewing their client’s disclosure. It is generally easier, and certainly less risky, to include documents in your disclosure on the grounds of potential relevance, than to exclude them.

‘So you end up disclosing far more documents than the court actually needs to determine the core issues in dispute at trial.’

The high cost of disclosure is clearly a problem for the clients who pay for it. But for lawyers, it is a source of income. Could that factor influence the reluctance to depart from standard disclosure?

‘I don’t think it is ever a deliberate consideration,’ muses Tilley, ‘but it will sometimes be ticking away in the subconscious.’

Clifford is more forthright: ‘It’s like turkeys voting for Christmas’.

The court’s attitude

None of this explains why the court itself does not take a firmer line in forcing parties to use the full range of disclosure options available. Are judges simply being too passive, taking the path of least resistance and casually waiving though applications for standard disclosure?

Crosse says: ‘If we want to reverse this trend of increasing disclosure costs, we need a marked change in culture and approach by the parties and the courts. At the moment, there is not enough engagement and co-operation between the parties in relation to disclosure, and there is a feeling that the courts could be more robust in managing cases.’

Ed Crosse

But the reason for that is not necessarily the judges’ fault. Crosse explains: ‘It is rare for the parties to have had any detailed discussions about how best to tackle disclosure before the first case management conference. That leads to an order for standard disclosure in the majority of cases.

‘There has been a tendency to blame judges for this. But while there will no doubt be examples of where the courts could have been more challenging when reviewing proposals from parties on disclosure, actually judges can only do that if they are provided with information about the scale of the task at hand. They need this before they can then make informed decisions and curb the excesses.’

Crosse continues: ‘Typically, a judge will receive the CMC bundle on a Thursday night before the Friday hearing, after a busy week of sitting. Disclosure is just one issue among many that they will need to look at – as well has having to look at other cases in their list.

‘So presenting a judge with volumes of inter partes correspondence about disclosure, or worse still, no correspondence at all, will not enable them to assist the parties on how best to approach the exercise and reduce costs.’

Solutions

With Jackson’s disclosure reforms having failed to produce any real change, and the daily generation of mountainous volumes of electronic data causing the costs to escalate at an alarming rate, something needs to be done. And it soon will be.

A working group chaired by Lady Justice Gloster has been beavering away behind the scenes, talking to lawyers, clients and judges about what needs to change. The group has focused on big commercial Rolls Building claims – which is where disclosure costs are at their most terrifying. It has had input from FTSE clients including Vodafone and Lloyds, as well as the Government Legal Department and an array of lawyers’ representative groups.

The result is a redraft of the disclosure rule under CPR Part 31, which is soon to be put before the Civil Procedure Rule Committee. It is then expected to be piloted in the Rolls Building, and probably the main regional commercial court centres. No decision has yet been taken on whether that pilot will be mandatory.

So what will the new rules involve? Crosse has been heavily involved in the project. He says: ‘A fresh approach is proposed, to modernise the current rules on disclosure and make them fit for purpose in an age of complex modern litigation, where disclosure of paper documents is the exception rather than the norm.

‘Clear duties need to be prescribed to drive change, backed by proportionate sanctions for non-compliance where parties fail to co-operate and engage. The rules also need to provide a clear structure and process to facilitate greater party engagement and co-operation.’

Crosse believes Jackson’s menu of disclosure options is ‘relatively high-level’ and can be improved.

‘One of the proposals of the working group is likely to be that there should be a full spectrum of orders that the parties can propose and the courts can order, ranging from an order for “no disclosure” in relation to a particular issue, right through to a “Peruvian Guano”-style disclosure order, for use in exceptional cases where very wide disclosure is justified.’

Electronic disclosure

While very wide-ranging disclosure should not be the norm, Crosse stresses that it is important that is is still possible under the new regime. The ability to secure extensive disclosure from the other side where it is needed is one of the key attractions of the UK as opposed to many civil jurisdictions, where such disclosure is not possible.

Commercial cases at the Rolls Building generate eye-watering disclosure costs

An important part of the proposals will be the replacement of the current electronic disclosure questionnaire (better known as the EDQ) with a new document. This will be designed to focus the parties’ discussions on key questions about the collation, processing and review of data; and in particular to encourage discussion around the use of technology.

In the dramatic world of disclosure, one character is both hero and villain: technology. The relentless proliferation of emails and other electronic data is the root cause of why the disclosure exercise can be so dauntingly vast. But it also holds the potential to save the day.

One development in particular has been valiantly reducing the time and cost of the disclosure exercise: predictive coding, or as it is also known, technology-assisted review. So how does it work? Clifford explains that in normal e-disclosure, the provider will take a metaphorical ‘hoover’ and suck up all the documents, uploading them on to a platform. It can then search for keywords such as a particular contract number; and the resulting documents will then need to be reviewed to see whether they are privileged, for example, or if they are relevant. A first review is generally done by paralegals, while a solicitor will carry out a second review, with a third review done by a partner. A disclosure list is then prepared and goes out the door.

‘But with predictive coding,’ says Clifford, ‘say if you have 100,000 documents – which would not be unusual – then instead of reviewing all the documents, you just do a sample of maybe 10%. Then the software starts to pick out why you are choosing a particular document – why is a document relevant in this context, but not in that context.’

Cutting out review work

Essentially, the software ‘learns’ why the lawyer is including some documents and excluding others, and then applies this to the remaining mound of files which do not need human review – cutting out 90% of the document review work. ‘That will shrink the costs involved in the process,’ Clifford says.

Last year proponents of predictive coding got very excited by the High Court’s decision in Pyrrho Investments Ltd v MWB Property Ltd [2016] EWHC 256 (Ch) – a multi-million-dollar case involving more than three million documents. Solicitor and e-disclosure expert Chris Dale says the case was very significant because, while there had been a number of other case management decisions endorsing the use of predictive coding, this was the first time such a ruling had actually made it into the law reports.

‘It was helped by the fact that the case had a master [Master Matthews] with the technical know-how to understand what it was all about, and he reduced it all to a nice neat 10-point summary.’

Master plan for predictive coding

(1) Experience in other jurisdictions has shown that predictive coding software can be ‘useful’ in appropriate cases.

(2) There is no evidence that predictive coding software leads to ‘less accurate’ disclosure than, say, manual review alone or keyword searches and manual review combined. In fact, there is some evidence to the contrary.

(3) There would be more consistency in using the computer to apply the approach of a senior lawyer towards the initial sample to the whole document set, than in using ‘dozens, perhaps hundreds, of lower-grade fee-earners’, each seeking independently to apply the relevant criteria in relation to individual documents.

(4) There is nothing in the CPR or practice directions to prohibit the use of predictive coding.

(5) The number of electronic documents that needed to be considered for relevance and possible disclosure in the case was ‘huge’, amounting to more than three million.

(6) The cost of manually searching these would amount to ‘several million pounds at least’.

(7) The costs of using predictive coding software would depend on various factors, ‘but the estimates given in this case vary between £181,988 plus monthly hosting costs of £15,717, to £469,049 plus monthly hosting costs of £20,820. This is obviously far less expensive than the full manual alternative, though of course there may be additional costs if manual reviews still need to be carried out when the software has done its best’.

(8) The estimated costs of using the software were ‘proportionate’ to the claim value, which was ‘in the tens of millions of pounds’.

(9) The trial date meant there would be plenty of time to consider other disclosure methods ‘if for any reason the predictive software route turned out to be unsatisfactory’.

(10) The parties had agreed on the use of the software, and also how to use it, subject only to the approval of the court.

Master Matthews also noted that there were ‘no factors of any weight pointing in the opposite direction’.

In the judgment, Master Matthews found there was no evidence that predictive coding was less accurate than manual review, and indeed there was some evidence that it was actually better. ‘The objection always was, would this technology be approved by a judge? But now there is a published judgment doing so,’ Dale says.

Another case from last November provides an important warning for lawyers. In Eaglesham v Ministry of Defence [2016] EWHC 3011 (QB), Mrs Justice Andrews was highly critical of the way disclosure had been managed. As a result, she refused a time extension and ordered the case to go straight to quantum.

The judge noted that the case was not one in which ‘the volume of documentation generated by the searches could not have been foreseen, and in which the delay has been caused by matters beyond the defendant’s control’.

She added: ‘I am not persuaded that the defendant went about the searches in a sufficiently thorough manner to begin with… If a team of six counsel was insufficient to carry out the filtering exercise in time, the defendant could and should have instructed more.’

Management of disclosure also came under fire in The RBS Rights Issue Litigation [2015] EWHC 3433 (Ch), in which Mr Justice Hildyard criticised ‘an unfocused disclosure process, which has fanned out exponentially and extravagantly without sufficient control and direction’.

He disapproved of ‘the commitment of increasing resource to the identification of documents, leaving a diminished resource for their assimilation, without properly taking stock as to whether the process had overtaken the purpose and/or whether a more confined process should be adopted, perhaps with the agreement of the claimants or the blessing of the court.’

So whereas lawyers may traditionally feel that the safest course is to opt for as wide a disclosure as possible, in fact such an approach carries its own risks, with the courts sometimes questioning why the disclosure monster was not kept on a tighter leash – and punishing the parties that failed to do so.

Dale says: ‘There is more scope than many lawyers realise to say, actually, I am not going to go for full disclosure, because my assessment is that we won’t find anything there that is going to count. But you do have to be able to articulate why this particular route is not worth going down.’

With changes to the disclosure rules now on the cards, we could soon see a new culture emerging in relation to disclosure, with greater, and earlier, engagement on the topic by both lawyers and judges. For Clifford, a more proportionate and practical approach could only be a good thing.

‘Standard disclosure is often sought because clients are looking for a magic bullet. But in reality, there is no such thing – or if there is, it is once in a lifetime. Why are we still searching for something that doesn’t exist?’

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